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Qiagen to Seek FDA OK Next Year for Two Genaco Panels; Consumables Drive Strong Q2 Growth

This article has been updated from a previous version that incorrectly stated that 7 percent of Qiagen's revenue came from Genaco. The article should have stated that 7 percent of Qiagen's third quarter revenue came from acquisitions.
Qiagen officials said this week that the company would seek US Food and Drug Administration clearance next year to market two PCR-based multiplex panels developed by the recently acquired Genaco Biomedical.
Though company executives said that they are currently prioritizing which panels they would initially push through the US regulatory process, it is highly likely the first will be an avian influenza panel. They also said that the tests could eventually be applied to a point-of-care platform, which would be able to provide results much more quickly than lab-based instruments.
In addition, Qiagen said its third-quarter revenues increased 20 percent, driven by strong consumables growth.
A few weeks ago, Qiagen acquired Huntsville, Ala.-based Genaco for $22 million in cash, plus 125,000 shares of restricted Qiagen stock that was issued to Genaco’s founder and chief scientist (see BioCommerce Week 11/1/2006). Qiagen also agreed to pay up to $18 million in milestones, which will be triggered when the firm receives certain anticipated grants and comparable funding.
The privately held firm has developed a proprietary PCR-based multiplexing technology, called Tem-PCR, which is used in developing molecular diagnostic tests. Genaco currently sells 11 test panels for respiratory, hospital-acquired, and bacterial infections, among other conditions, which are currently sold for research use only. The firm also has been finishing clinical studies on its H5N1 avian flu assay.
“Genaco is early-staged but surprisingly advanced,” said Qiagen CEO Peer Schatz during the firm’s third-quarter conference call this week. “We are planning at least two 510(k) submissions with the FDA next year and want to initiate some more clinical trials” on other panels, he said.
Schatz could not confirm what conditions those assays would target. “There is still some choice on that. The one product that we did highlight [at the time of the acquisition] was the avian influenza product, which has a number of other pathogens included in the package to ensure discrimination of other pathogens against human influenza and the other various subtypes,” said Schatz.
“That’s one that’s on a high priority due to the number of partners who have shown very aggressive interest in this product,” he said. “We have a number of other products that we mentioned … respiratory panels, hospital-acquired infections, and we are currently prioritizing that. But two are going to the clinic, and most likely one of them will be the avian influenza” panel.
Schatz also noted that between 8 million and 12 million tests are performed for respiratory conditions each year. “This is a market that is expected to grow going forward, and clearly there’s a lot of immunoassay testing, but with a very limited capability,” he said. “So, as this goes molecular at these types of numbers this is a very substantial market opportunity. It’s barely penetrated yet, [and] it’s a market that needs sensitivity and needs multiplexing at the same time.”
Qiagen expects that Genaco’s Templex panels will primarily be used to qualitatively detect potential targets that will later be quantitatively tested by assays developed by Artus, which Qiagen acquired last year for $40 million (see BioCommerce Week 6/2/2005).
Qiagen said that although the assays can be used on a variety of detection instruments, they are currently optimized and marketed for use on Luminex’s bead-based platform. Qiagen has been selling its LiquiChip system, which is a modified version of Luminex’s platform, since 2000.
“We think Luminex gives us a great performance with our current panels,” Schatz said during the call this week. But, he said the panels could potentially be applied to a point-of-care platform — a move that could greatly expand its market opportunity.
Asked how the new Genaco panels tie in with the already marketed Artus molecular diagnostic assays, Schatz replied, “We have a large number of products already CE-marked in Europe, and we clearly are going to move very aggressively on CE marking the Genaco panels — the existing ones and future ones.
“Having the bundle of our CE-marked panel and the CE-marked qPCR assay, the two in tandem, that’s a very strong argument,” he said. “We definitely see it not only generating sales of panels but also making it easier to link and reference and create reimbursement strategies.”
Schatz said that the firm has a similar strategy planned for the US with the 510(k) process.
Q2 Sales, Profit Rise
Qiagen reported third-quarter revenue growth of 20 percent to $117.9 million from $98.6 million year over year, beating its guidance of $116 million.
The largest gains came from consumables sales, which account for 89 percent of Qiagen’s sales and contributed 20 percent revenue growth. Instrument sales, which account for 10 percent of Qiagen’s sales, grew 15 percent for the quarter.
Roughly 7 percent of the quarter’s revenue came from acquisitions. The firm posted overall organic growth of 10 percent for the quarter.
By region, sales in Asia grew 63 percent driven by strong demand in China, while sales in North America grew 13 percent, and sales in Europe were up 19 percent for the quarter.
Qiagen’s net income increased to $19.4 million, or $.13 per share, from $17.6 million, or $.12 per share, in the year-ago period.
The firm’s R&D spending rose 29 percent to $10.1 million from $7.8 million year over year, and Qiagen finished the quarter with around $492 million in cash and cash equivalents. 

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